Rank Group Revenue Rises 5% as Gaming Tax Risks Grow

Key Points

• Rank’s like-for-like net gaming revenue jumped 5% to £216.1m, which is pretty impressive considering three of its Grosvenor casinos have closed their doors for good.
• The gaming machines that are making Grosvenor all that more cash, a 14% increase over the past few months, are now also the ones in the firing line for a proposed tax hike.
• Two directors showed some faith in the company by buying shares at 74p, even though the stock price has dropped by 43% in the past year.

All Growth is Not Created Equal

Rank Group is doing alright, we guess, but at what cost? Like-for-like net gaming revenue rose a respectable 5% to £216.1m in the three months to 30 September. That’s quite a feat, especially considering that three of its Grosvenor casinos are no longer in business.

People have been calling this a Q3 result, but technically it’s actually the first quarter of Rank’s 2026/27 financial year. The distinction might seem minor but trust us, it matters. After all, Rank’s actual third-quarter results back in April were the complete opposite, full of worries and concerns.

According to this breakdown from Alliance News, digital NGR rose 6% to £64.9m while Grosvenor climbed 6% to £108.1m. So, both channels are doing well, but the update still ended with a big fat warning sign.

Chief executive Richard Harris gave a bit of a pep talk after the numbers came out. “I am pleased with the revenue growth we’ve seen in the first quarter, especially how well our gaming machine business has been doing in Grosvenor and the overall resilience of our UK digital business,” he said.

Digital’s Doing Alright, Despite the Heavy Tax Burden

When the Remote Gaming Duty went up to 40% back in April, Rank was ready for it. To head off the worst of it, they made a few smart adjustments, like trimming some of their marketing and reducing supplier costs. They kept pumping money into performance marketing and customer incentives, though.

Six months down the line, the UK side of the business looks like it has weathered the storm. UK digital growth was a healthy 6%, that’s with less money being spent on above-the-line marketing. Mecca’s online business was the star performer, up 7%.

International digital, on the other hand, grew at a much slower pace of 4%. That’s still a decent number, but it’s clear that the focus is shifting back to the UK.

Grosvenor’s Machines Are the Real Stars, But They’re Also the Ones Being Targeted

Grosvenor visits didn’t really budge, but the amount that people were willing to spend per visit went up 5%. But the real growth story was the gaming machines, they jumped 14%.

That’s a pretty big deal, especially since Rank has gone on record saying they’re “confident that further improvements can be made as we sort out the machine estate.” Let’s hope the Treasury isn’t planning on putting a spanner in the works.

Unfortunately, even with all this growth, Rank has been forced to close three of its Grosvenor casinos, in Swansea, Reading Central and Sunderland. They’re basically saying these places were no longer making enough cash to keep them open.

It’s worth noting that Reading was struggling long before the tax issue came up. Staff found out in the summer that the casino had been running at a loss for six years, with a whopping £2.3m in the red and a further £630,000 below budget.

We don’t have numbers for Swansea and Sunderland, but you get the picture.

Mecca Heats Up as Enracha Rises

Mecca bingo venues ended flat at £32.2m with fewer visits but higher spending per visit, both down 3%.

Mecca is also getting a benefit from the Bingo Duty abolition that is set to come into effect from April 2026, which should help alleviate costs in venues that currently struggle with footfall.

Over in Spain, business was steady. Enracha rose 7% to £10.9m thanks to an 11% increase in electronic gaming.

The Proposal That Lurks Behind All Numbers

Everything is dependent on one sentence in the outlook. According to Rank, profit in FY2025 is expected to be in line with market expectations “based on the current industry tax regime in the UK.”

The current industry tax regime now looks under threat. According to the Social Market Foundation, ministers need to double the duty on Category B machines to 40%, which would generate additional annual income between £275m and £458m.

The proposal covers Category B machines and does not affect pubs and their machines with lower stakes. So far, it is just a proposal from a think tank, and the government has not commented yet, as the next budget is planned for 28 October.

In September, he added to the statement, saying that approximately one-third of Rank’s estate would shut down under a 40% levy rate. Rank estimates the loss of around 2,000 jobs in such a case.

Analysts Count Costs in Different Ways

They price the risk, but their models do not measure the same numbers. Deutsche Bank estimates the impact at around £35m per year, which is approximately 44% of forecasted 2028 EBIT.

Shore Capital analysts measured headwinds gross, before any actions can be taken to mitigate the impact, coming up with a £25m cost for Grosvenor and a £10m cost for Mecca. They warn that the £100m profit target for the medium-term period could be missed because of it.

Peel Hunt analysts, in turn, expect no harm to be done to Rank during the budget and expect the budget to pass smoothly. Other analysts seem to have a different opinion though; Genting UK CEO Paul Willcock said 13 of its 32 casinos will become unsustainable under 40% duty on Category B machines.

On the betting side, Entain CEO Stella David urged the UK Government to “carefully consider any further gambling tax increases.”

Shares Drop, But the Boardroom Paints a Different Picture

Shore Capital’s assessment has Rank’s shares at 74p, down 43% over a full year. In October, Rank made the choice to accept a £5m Gambling Commission settlement, a fine they’d already set aside.

An interesting transaction caught a lot of attention back in September. Harris sold 192,215 shares at 74.51p, a move worth roughly £143,200.

The actual filing behind all this explains the story. The 192,215 shares sold were actually coming from a long-term incentive award that had vested on 28 September. Harris had to sell those to cover the tax bill and fees that came with it. He also ended up with a nice bonus, 407,716 shares. He’s kept more than half of them.

In the other direction were the board members. Chair John Ott bought 13,151 shares at 74.54p on 28 September. On the 29th, non-executive director Christian Nothhaft jumped in and bought 40,000 shares.

What to Expect Next?

The 28th October Budget looks set to have a bigger say in Rank’s near future than any single financial number. We’ll get the next update with their interim results on 28th January 2027, where we’ll finally get to see the numbers after the Budget.

Expert Take: The very Thing Driving Growth is Exactly What is Being Hit by Tax

In our view the majority of coverage is missing the real story here. Rank’s star performer, their game machine revenue up 14%, is exactly the thing that the SMF is pushing for tax increases on.

This creates an awkward reality for both sides. Rank says their machines fund jobs and investment while the SMF argues that machine gaming is the problem with some of the worst harm rates in the industry.

We also think the argument about gambling venues is a little sketchy. Genting says the venue closures push players towards black market sites, but the SMF says these usually boil down to premises that are easy to spot. Neither side seems to be able to prove their point, so we’re just going to say that both claims are still up in the air.

The one thing which really gets our goat is the overall mood of the market. A 43% fall in value has led some to think the company has taken a massive hit, yet two directors still managed to pick up shares at 74p. Insiders aren’t always right, but they don’t usually go and buy in if they think things are going to go down the pan either.

Still we think Rank should separate their argument over tax from the damage caused by structural closures. Reading spent 6 years in the red before any tax proposal came along, and to muddle the two just weakens their argument which is actually quite strong on its own merits.

Our verdict is that Rank does have a pretty strong case, and its strongest weapon is its raw numbers, not scaremongering. On the 28th of October, ask one question: Can Rank’s machines grow faster than any new tax takes away?